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Siemens Financial Services- Financial expertise for profitable useInvestor meeting,Dr. Herbert Lohneiß, CEOMunich, September 18, 2006

Sep-06 Investor Meeting

This presentation contains forward-looking statements and information – that is, statements related to future, not past, events. These statements may be identified either orally or in writing by words as “expects”, “anticipates”, “intends”, “plans”, “believes”, “seeks”, “estimates”, “will” or words of similar meaning. Such statements are based on our current expectations and certain assumptions, and are, therefore, subject to certain risks and uncertainties. A variety of factors, many of which are beyond Siemens’ control, affect its operations, performance, business strategy and results and could cause the actual results, performance or achievements of Siemens worldwide to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements. For us, particular uncertainties arise, among others, from changes in general economic and business conditions, changes in currency exchange rates and interest rates, introduction of competing products or technologies by other companies, lack of acceptance of new products or services by customers targeted by Siemens worldwide, changes in business strategy and various other factors. More detailed information about certain of these factors is contained in Siemens’ filings with the SEC, which are available on the Siemens website, www.siemens.com and on the SEC’s website, www.sec.gov. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in the relevant forward-looking statement as anticipated, believed, estimated, expected, intended, planned or projected. Siemens does not intend or assume any obligation to update or revise these forward-looking statements in light of developments which differ from those anticipated.

Safe Harbour Statement


Agenda

Siemens Financial Services at a glanceSFS expertiseGlobal presenceDevelopment of SFS since its foundationKey financials

Business portfolio SFS and strategic focusBusiness portfolioGroup strategy

SFS financial disclosure and capital structureSFS as part of SiemensSFS in Siemens SOTP

1.1.

2.2.

3.3.


SFS expertise

SFS is a captive provider of financial solutions:Combination of international financial expertise and comprehensive technology & industry know-howFinancial solutions geared towards the requirements of Siemens and of industrial companiesCenter of competence for financial services and financial risk management for Siemens; manage financial assets like a bank in line with the best benchmarks in the financial industries

SFS is positioned internationally with a strong presence throughout Europe and North America

SFS offers capital (leasing and receivables financing and equity investments in infrastructure projects) and fee business solutions (project and export finance, pension asset management and consulting, insurance brokerage for industrial clients and Siemens employees and treasury services)

Most of fee business is generated internally and most of capital business is generated with external customers

1.1.


EUR 7,724 mn. Project volume to be financed

EUR 0.5 mn. Total assets

Africa, C.I.S. Middle East


EUR 6,393 mn. Total assets

Europe


EUR 3,741 mn. Total assets

Americas

Total assets, status: Sept. 30, 2005Project volume to be financed, status: Feb. 28, 2006; SFS acts as advisor; project volume includes total volume of requested financing for projects of all Siemens Groups


EUR 12 mn.Total assets

Asia-Pacific

1.1.

Global presence and distribution of business volume


Development of SFS since its Foundation

Mar

ket

SFS

Growth economic recoverysince 2004

Strengtheningin difficult environment

2000 - 2004

• Trough of economic downturn in Q2/2003 in Europe

• Lacking consumption and capital investments

• Precipitated decline of interest rates • Heavy and unexpected decline of

stock markets

• Best-practice risk management established

• Process costs reduced• IT platforms launched• Regional presence optimized• IBIT increased due to favorable

business mix

Build up in booming economy

1997- 2000

• Economic boom phase /New Economy

• E-business hype• Rising stock markets

• Foundation of SFS as a separate Siemens Group in 1997

• Acquisition of SchroderLeasing in 2000

• Integration of Insurance business in 2000

• High growth expectations

• Worldwide economic recovery• Capital investments increase

again• Rising share prices• Interest rates remain low

• Turnaround in asset growth in 2004

• Growth comes back in captive and external business

• Leasing and Factoring grow faster than market

• Acquisition of Broadcastle plc (small ticket provider focused in healthcare leasing)

1.1.


9.18.4

24,9% 24,6%RoE b.t.Target: 18%-22%

Total Assets(in bn EUR)

1,672

10,148 mn.

32,4%

983 mn.

319 mn.

FY 2005

1,376

8,681 mn.

23,2%

930 mn.

216 mn.

FY 2002

1,469

8,445 mn.

24,9%

1,080 mn.

269 mn.

FY 2003

1,566

9,055 mn.

24,6%

1,015 mn.

250 mn.

FY 2004

1,747Employees

10,011 mn.Total assets

22,0%RoE2) (pretax)

1,131 mn.Equity1)

187 mn.IBIT

Q3 2006

10.1

32,4%

1) Allocated Equity2) RoE: Return on Equity

10.0

22,0%

8.7

23,2%

1.1.

Development of key financials


Agenda




1.1.

2.2.

3.3.


1) As of 30.09.2005 externalinternal

Equipment &Sales Financing

(ESF)

Equity

(EQ)

Treasury & Finan-cing Services

(TFS)

Leasing & receivables financing

Asset classes:IT, telecom-munication, office, medical, machinery

Equity partici-pations in infra-structure projects

Inhouse bank for payment transactions, cash manage-ment, financing, interest and currency risks

Insurance

(INS)

Risk advisory, structuring and brokerage of in-dustrial insurance solutions; Broke-rage of insurance contracts and mutual funds for employees

Project & ExportFinance

(PEF)

Advisory for export and projectfinancing; issuance and administration of guarantees and advice on letters of credit

Capital businesses Fee businesses

Businessactivities

Divisions

IBIT sources 1)

Businessorigination 1)

Investment Management

(IM)

Asset Manage-ment & Advisory (Equities, fixed income, real estate) for institutional investors and retail funds

Employees 1) 1,052 17 130 108 63 98

Capital Business drives the B/S of SFS and contributes 60% IBIT; Fee Business stands for 40% of total IBIT.Following the growth opportunities portfolio will shift towards capital business

2.2.

Business portfolio

Key figures 1) Total assets EUR 9.6 bn.

Total assets EUR 297 mn.

Project volume EUR 55.3 bn, 600 projects

Managed fund assets EUR 18.3 bn.

Total assets under management EUR 47.4 bn.

Brokered gross premium volume EUR 446 mn


Performance and PortfolioReach target margin of 18-22% RoE Grow >2x GDP

Support & drive Siemens sales

Act as CoC for fi-nancial risk mana-gement for Siemens

Drive profitable growth in external business

Push sales through financing for groups, regions and operating companies & Siemens OneCreate additional sales for Siemens by providing customer tailored financing

Keep risks off the balance sheets of Siemens/ Groups, Regional Operating CompaniesManage financial assets according to banking standards

Profit, size & diversification; benchmarking; innovationOrganic & inorganic growthFocus on Capital BusinessSelective approach in Fee Businesses

To best support the internal business in financing and risk management, SFS has to strengthen its position in the external market. External business moreover contributes significantly to SFS profit and growth targets

2.2.

Group strategy

I

II

III


Support and drive Siemens sales:Financing structure for Uniklinik Frankfurt

Customer brief:Develop business model/financial structure for operating a state of the art Siemens Magnetic Resonance Tomograph (MRT) at a total project volume of EUR 2.2 mn., term 72 month, flexibility, third party user

Uniklinik Frankfurt – J. W. v. GoetheShareholder Hessen, 1,400 Beds

One of Germany‘s leading universitary clinics

Building extensions make this project to Hessen‘s currently biggest construction site

SFS financial solution:Structuring tailor-made flexible usage concept, including comprehensive servicesStructuring made by Siemens Project & Export Finance, contracting realized by Siemens Finance & Leasing, GermanySuccessful all in one solution meeting customer needs

2.2.

I


Support and drive Siemens sales:Equity investment in Tahaddart power plant

Project:Equity investment in the power plant of EnergieElectrique de Tahaddart in Tangier, Morocco

SFS financial solution:Equity investment of 20% of total project costs of USD 280 mn.

Design, procurement and construction of the plant by Siemens Power Generation (PG); maintenance and operation by PG over 20 years

Energie Electrique de Tahaddart S.A., Morocco

Construction of a combined cycle power plant in Tahaddart

Capacity of 384 MW

Shareholders: Office National de l’Electricité(ONE) with 48%, Endesa S.A. with 32%, Siemens Project Ventures GmbH (SPV) with 20%

2.2.

I


Act as Center of Competence for financial risk management for Siemens

SFS fee

business

SFS fee

business

Treasury & Financing Services (TFS) Siemens Corporate Treasury Assets

Investment Management (IM) AssetManagement

Siemens Pension Trust

Vendor financing for Operating GroupsProject & Export Financing (PEF)

Insurance (INS)Brokerage forOperating Groups

Risik transfer into market

Status: Sep 30, 2005

Balance sheets of Corporate Treasury and Operating Groups

Off balance sheet for Siemens and outside

TreasuryServices

Advisoryservices

2.2.

II


Act as Center of Competence for financial risk management for Siemens: Insurance solution for Siemens companies in China

Customer assignment:Placement of China-wide insurance programs within dynamic parameters; adaptation of the programs to state-regulated insurance market with regionally highly divergent legal parameters

All companies in Siemens majority ownership and fully owned Siemens subsidiaries in China

SFS financial solution:First-time implementation of a China-wide program for liability, transport, property and loss of profits insurance

Cooperation with locally licensed insurance companies

Local center of competence for all insurance-related requirements

Bild fehlt

2.2.

II


2005 2008e

2005 2008e

New bookings (Leasing) Europe1) (p.a., in bn EUR)

1) Served equipment leasing market exl. real estate, vehicles and big ticket leasing; European figures include all countries with MMF presence; APAC = China and Japan

2) Short term credit generally secured on account receivables and inventory, but may also include fixed assets

60

73

37533

53

Assets under Management Austria & Germany (p.a., in bn EUR)

Austria

624

64

Source: Leaseurope, local leasing associations Source: ELA

Source: Federal Reserve Flow of Funds 01.06, BCG Source: Deutscher Factoring Verband Source: VÖIG, BVI; AuM for institutional Investors

77 58

60

+17% 87

808

+11%

+1%

Source: Local leasing associations 2005 2008e

New bookings (Leasing) APAC1) (p.a., in bn EUR)

New bookings (Leasing) USA1) (p.a., in bn USD)

Factoring Turnover Germany (Inhouse) (p.a., in bn EUR)

Outstanding credits USA2) (Asset based lending) (p.a., in bn USD)

+6%

Germany

2.2.

Drive profitable growth in external businessIII

2005 2008e

2005 2008e

In its external business, SFS is addressing attractive niches in markets growing > 2x GDP

2005 2008e

100+9%

446+6%


Examples for strengthening external business

Strengthening role in Small Ticket Business:SFS is leading player in flow business in several European markets, e.g. top3 player in UK

Successful roll out of flow business into new markets like Germany and Spain

Strengthening of role through inorganic growth: Acquisition of Broadcastle plc. in 2005

Strengthening external Vendor Business:SFS won global SAP Vendor Financing Program against 19 competitors; program will be rolled out

into 48 countries

Strengthening working capital financing in attractive markets:Push of Structured Programs („ABS-Light“) in growing German market

Focus on asset based lending in the US

Strengthening attractive niches in Fee Business:Successful roll out of Innovest Manager of Managers in the German market

2.2.

III


Drive profitable growth in external business: Online leasing solutions for Konica Minolta (Vendor Program)

Customer assignment:Establishment of an online leasing system for Konica East Direct (e-business solution)

Konica Minolta Business Solutions East

Konica Business Machines (UK) Ltd is part of the international Konica group.

It is considered a pioneer in photography and world market leader in the information imaging sector.

SFS financial solution:Innovative e-business application “ease-elease”Accelerated credit approval process (time and cost) Timely accountingFaster payment receiptProcessing of more than 750 transactions with the help of this online application since its introduction

“Ease-elease speeds up payment and improves cash flow.”(Peter Holton, Finance Director)

2.2.

III


Drive profitable growth in external business: Receivables financing for LEONI AG

Customer assignment:Creation of additional financing alternative within financing mix

Working-capital and risk-management solution

Sale of receivables with balance-sheet relief (“true sale”)

LEONI AG

Global supplier of systems and designs for wire/cable (electronic) and cable assemblies (automotive)Consolidated sales of EUR 1.5 billion 32,000 employees worldwide

SFS financing solution:Revolving in-house factoring program with limited ongoing processing costs

Integration of two foreign subsidiaries into the ongoing program

Flexible receivables volumes presentable at the end of each quarter

“In the end, ABS Light appeared to be the most sensible solution for LEONI”(Robert F. Steiner, head of corporate finance)

2.2.

III


Agenda




1.1.

2.2.

3.3.


SFS as part of Siemens:SFS on Siemens AG balance sheet (June 30, 2006)

Operating leases

Capital leases (current receivables) & internal factoring

receivables

Capital leases (receivables > 1 year)

SFS short term debt refinanced via Treasury

SFS long term debt refinanced via Treasury

SFS equity

1

5

6

7

8

External factoring& loans

Equity participations

2

3

4

1

2

3

4

5

6

7

8

6/30/06 9/30/05Current Assets

Cash and cash equivalents 35 47Marketable securities 24 17Account receivables, net 3,866 4,370Intracompany receivables 46 127Inventories, net 98 72Deferred income taxes 92 82Assets held for disposal - - Other current assets 1,119 978

Total current assets 5,280 5,693Long-term investments 320 305Goodwill 132 131Other intangible assets, net 18 15Property, plant and equipment, net 3,735 3,795Deferred income taxes 37 37Other assets 3,419 3,322Other intracompany receivables 1 6

Total assets 12,942 13,304

Current liabilitiesShort-term debt and current maturities of long-term debt 228 386Accounts payable 213 207Intracompany liabilities 6,127 6,864Accrued liabilities 145 156Deferred income taxes 228 210Liabilities held for disposal - -Other current liabilities 304 277

Total current liabilities 7,245 8,100Long-term debt 448 521Pension plans and similar commitments 2 -Deferred income taxes 166 179Other accruals and provisions 362 418Other intracompany liabilities 2,668 2,183

10,891 11,401

Total shareholders' equity 2,051 1,903Total liabilites and shareholders' equity 12,942 13,304

AssetsFinancing and Real Estate

Liabilities and Shareholders' Equity

All figures in mn EUR; for nine months ended June 30, 2006 and 2005


SFS as part of Siemens: SFS on Siemens P&L (June 30, 2006)

Income from operating lease receivables &

fee income from SFS advisory business

SFS net interest income, mainly from

capital leases & factoring

1

2

1

2

(1) The income taxes of Financing and Real Estate are based on the consolidated effective corporate tax rate applied to income before income taxes

6/30/06 9/30/05Net sales 1,728 1,578Cost of sales (1,436) (1,274)Gross profit on sales 292 304Research and development expenses - - Marketing, selling and general administrative expenses (252) (234)Other operating income (expense), net 123 137Income from investments in other companies, net 43 89Income (expense) from financial assets and marketable securities, net (32) (27)Interest expense of Operations, net - - Other interest income (expense), net 105 114

Income from continuing operations before income taxes 279 383Income taxes 1) (68) (87)Minority interest - -

Income from continuing operations 211 296Income (loss) from discontinued operations, net of income taxes - 3

Net income 211 299

Financing and Real Estate

All figures in mn EUR; for nine months ended June 30, 2006 and 2005


SFS in Siemens SOTP:Methodology

SAG operating groups enterprise value

+ SFS equity value

+ SFS net debt

= SFS enterprise value

+/- ……

= SAG enterprise value

+/- SAG net debt, including SFS

+/- pension obligations etc.

+/- ……

= SAG equity value

3.3.


SFS in Siemens SOTP:Equity value and Siemens net debt

Equity value

3.3.

SAGnet

debt

Without SFSIncluding SFS

as of 30.06.2006 (in EUR bn)

Mostly book or profit before tax multiples are used

(4.3)

(8.3)

7.6

(11.9)

7.6

4.0

(3.6) Total cash Siemens (incl. marketable securities)

Debt SFS

Total debt Siemens

Net cash/ net debt Siemens


Finance & Operating

leases

Other assets & inventory 1)

Cash Purchased receivables

Investments Total assets/

liabilities

Equity Accruals & other liabilities

Total debt

Approx. 80% internal

business

Almost all leasing business is with

external customers

Assets Liabilities

SFS in Siemens SOTP:SFS net debt position (as of 30.06.2006)

SFS debt for financing of

operating groups

3.3.

Almost all SFS assets, and consequently SFS debt, are related to business with external customers except for the internal receivables financing business

1) Other assets & inventory includes: Securities, fair values (positive) derivatives/FX, tax receivables, fixed assets, intangible assets, land and building, prepaid expenses, loan receivables and inventories

10,011 1,131

8,308

2,5 bn 2,5 bn


SFS in Siemens SOTP: Enterprise value calculation for SFS

3.3.

In order to reflect SFS in the SOTP, the internal debt component has to be reflected in the SFS net debt for the enterprise value calculation

Equity value SFS

8,3 bn

SFS net debt FY 2005

SFS debt for financing of operating groups

Enterprise value SFS corrected

Equity value SFS

SFS adapted net debt

2,5 bn

5,8 bn


”Group profit from Operations” is reconciled to ”Income before income taxes” of Operations under ”Reconciliation to financial statements” on the table ”Segment information.” See ”Financial Reports / Fiscal 2005, Annual Report Fiscal 2005 or Fiscal 2006 / Quarter 3 / Financial Statements” at our Investor Relations website under www.siemens.com

The allocated equity for SFS is determined and influenced by the respective credit ratings of the rating agencies and by the expected size and quality of its portfolio of leasing and factoring assets and equity investments and is determined annually. This allocation is designed to cover the risks of the underlying business and is in line with common credit risk management standards in banking. The actual risk profile of the SFS portfolio is monitored and controlled monthly and is evaluated against the allocated equity.

”ROE” (Return on equity) margin for SFS was calculated as SFS’ income before income taxes divided by the allocated equity for SFS. Allocated equity for SFS as of September 30, 2005 was €983 million. See also Siemens’ Form 20-F at our Investor Relations website under www.siemens.com

Siemens ties a portion of its executive incentive compensation to achieving economic value added (EVA) targets. EVA measures the profitability of a business (using Group profit for the Operating Groups and income before income taxes for the Financing and Real estate businesses as a base) against the additional cost of capital used to run a business, (using Net capital employed for the Operating Groups and risk-adjusted equity for the Financing and Real estate businesses as a base). A positive EVA means that a business has earned more than its cost of capital, and is therefore defined as value-creating. A negative EVA means that a business is earning less than its cost of capital and is therefore defined as value-destroying. Other organizations that use EVA may define and calculate EVA differently.

A reconciliation of EVA may be found on our Investor Relations website under www.siemens.com

Reconciliations and definitions


Siemens Investor Relations Team

Webpage: http://www.siemens.com Investor Relations

e-mail: [email protected]

Fax: +49-89-636-32830

Marcus Desimoni +49-89-636-32445

Roland Bischofberger +49-89-636-36165

Frank Heffter +49-89-636-34095

Irina Pchelova +49-89-636-33693

Christina Schmöe +49-89-636-32677

Susanne Wölfinger +49-89-636-30639

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